Some policymakers believe that EU competition policy prevents the emergence of industrial champions. The column argues that Europe’s competition policy has successfully contained the rise in concentration and excess profits, and the EU should not follow the US in weakening its approach. Instead, the EU needs to strengthen its trade policy to be more assertive on reciprocity in market access and control of industrial subsidies.

Populist politicians argue that protectionism stimulates the domestic economy. This column uses data on temporary trade barriers from antidumping investigations to show that when small open economies have imposed protectionist measures, it has caused inflation to rise and real economic activity to fall. Empirical analysis and model-based exercises show that protectionism is costly even when used temporarily, even for economies stuck in liquidity traps, and regardless of the flexibility of the exchange rate.

Less than two years after his steel and aluminium tariffs came into effect, President Trump decided to increase the coverage of these tariffs to several downstream products whose domestic producers were hurt by the original tariffs. This column, first published in 2016, presents evidence for such ‘cascading protection’, showing how US protection of inputs increases the probability of petitions for protection by their downstream users.

In times of economic difficulty, governments are often under pressure to adopt measures to restrict trade. This column says that contingency measures allowing trade policy flexibility can play an important role in maintaining a rule-based system of multilateral trade in such circumstances. But there is sufficient latitude for WTO-compliant protectionism that vigilant monitoring remains necessary.

Trade protection is on the rise around the world and risks pushing the economy into prolonged contraction. Officials have proposed more than 60 new trade restrictions since the beginning of the financial crisis. While a serious outbreak of protectionism has yet to occur, vigilance and leadership are required.